Driven by significant declines in claim frequency and improvement in loss development (i.e., claims are developing to a lower ultimate value) the National Council on Compensation Insurance is proposing that Florida officials drop the workers compensation rate by 16.5 percent, effective Jan. 1, 2008.
Based on its review of the most recent data available the NCCI analysis prompted the organization to propose a fifth consecutive state-wide rate decrease since October 2003 after Florida workers compensation rates hit a high point prior to the 2003 workers compensation reform.
NCCI’s Lori Lovgren headed the research and the subsequent proposal procedure. She said the previous rate reductions approved by the Florida Office of Insurance Regulation are as follows:
• -14.0 percent (Oct. 1, 2003)
• -5.1 percent (Jan. 1, 2005)
• -13.5 percent (Jan. 1 2006)
• -15.7 percent (Jan. 1, 2007)
NCCI presented the report to Florida Insurance Commissioner Kevin McCarty on Aug. 24. The OIR is expected to schedule a public rate hearing in October.
Lovgren said assuming the filing is approved as proposed, the overall average rate impact at an industry cumulative group level from October 2003 through January 2008 would be 50.4 percent.
Florida’s lost time claim frequency declined by 12.6 percent in 2006, according to Lovgren’s report. While medical severity (i.e., average size of the medical portion of the claim) continues to grow, the decline in claim frequency coupled with the growth in wages much more than offset the growth in medical severity, she said. Claim frequency declines are mainly attributable to demographics, business efforts to promote safe working conditions, technological improvements, and the impact of global competition.
The improvement in loss development, that began prior to the 2003 Florida workers compensation reform, continues and appears to have been bolstered by that reform which, among other things, tightened compensability standards and limited attorney fees, Lovgren added.
Source: National Council on Compensation Insurance
Was this article valuable?
Here are more articles you may enjoy.
Marsh McLennan Agency to Buy Fisher Brown Bottrell for About $316M 
Chubb to Acquire MGA Healthy Paws From Aon 
South Carolina Ringleader Sentenced to 8 Years for Staged Accidents 
Allstate Reports $731M in Q1 Pretax Catastrophe Losses 
